Foreign Buying Plummets In Vancouver: Sales To Foreigners Crash 96%

China’s favorite offshore money laundering hub is officially no longer accepting its money.
According to data released by British Columbia’s Ministry of Finance on Thursday, foreign investors officially disappeared from Vancouver’s property market last month after the local government imposed a 15% surcharge to curb a record-shattering surge in home prices. Overseas buyers accounted for a paltry 0.7% of the C$6.5 billion of residential real estate purchases in August in Metro Vancouver; this represents a 96% plunge from the seven weeks prior, when foreigners were responsible for 16.5% of transactions by value.
According to the latest data overseas buyers snapped up C$2.3 billion of homes in the seven weeks before the tax was imposed, and less than C$50 million in the next four weeks. The government began collecting data on citizenship in home purchases on June 10. The ministry said auditors are checking citizenship or permanent residency declarations made by buyers and also reviewing transactions to determine if any were structured to avoid tax (spoiler alert: most of them were).
Across the province, the participation of foreigners dropped to 1.4% of transactions by value in August, from 13% in the preceding seven weeks.

This post was published at Zero Hedge on Sep 24, 2016.

The Secrets of Commenters & Comment Readers on WOLF STREET (and the Entire Financial Media)

The surprising numbers!
The other day, I posted an article encouraging our readers to check out our amazing comment section. It received over 100 comments that included a discussion of an issue I’d triggered, and that we could not resolve. Now I found the answer.
I claimed – based on my vague memory of a Guardian report I’d read a couple of years ago but could no longer find – that only about 10% of the readers actually dared to go south and venture into the unknown territory of comments, where all kinds of surprises and mayhem might lurk.
This triggered a number of responses and sent some helpful commenters and me into a renewed search for this Guardian report – which remained elusive.
But I ran into a related paper from academia, authored by Natalie (Talia) Jomini Stroud, an Associate Professor in the Department of Communication Studies, Assistant Director of Research at the Annette Strauss Institute for Civic Life, and Director of the Engaging News Project at the University of Texas at Austin – which also happens to be where, back in the day, I got my MBA.

This post was published at Wolf Street by Wolf Richter ‘ September 24, 2016.

“Eight Election Trades For November 8th”

No matter the outcome of the presidential election, according to BofA’s Chief Investment Strategist, Michael Hartnett, 2017 will likely be a year of small absolute returns as the bank expects higher rates will collide with high bond and equity valuations, but it will be a year of big rotations “as investors shift from ZIRP winners like bonds, US, growth stocks to ZIRP losers like commodities, banks and Japan”, where BofA forecasts 20,000 on Nikkei, although for that to happen the currency would have to implode in what may be a terminal loss of faith in the central bank.
Still, with all attention now focused on the key risk event until a potential December rate hike, namely the November 8 presidential election, BofA provides 8 specific election trades for the election.
In a note titled “Eight election trades for Nov 8th”, Hartnett shares a variety of trade ideas, some “election-specific and some result-dependent: long VIX futures; long AUDUSD vol; long TIPS; long global E-commerce, short fast restaurants (inequality); long US materials and largecap banks (fiscal); long US small caps, short emerging markets (Trump protectionist); long gold, short EU banks (Trump geopolitics); long Mexican peso (Clinton victory).”

This post was published at Zero Hedge on Sep 24, 2016.

Doug Noland: Like Old Times: Q2 2016 Flow of Funds

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
The beginning of the year seems ages ago. Recall how securities markets fell under significant stress. Global central bankers responded (Pavlovian) with more QE and lower rates. Here at home, the Fed suspended its rate ‘normalization’ plan after one single little baby-step. As for the Fed’s Q2 2016 ‘flow of funds’ report, it was almost Like Old Times. Rapid GSE growth helped to liquefy U. S. securities markets, spurring speculative leveraging and Wall Street finance more generally, including securities firms balance sheets, ‘repos’, funding corps and, even, mortgage lending. Credit inflated, securities markets inflated, Household Net Worth inflated and the mirage of great wealth endured.
For the second quarter, Total Non-Financial Debt (NFD) expanded at a 4.4% rate, down from Q1’s 5.4% (while matching Q2 2015). Household debt growth jumped to a 4.4% pace (from Q1’s 2.7%), the strongest expansion in two years. Total Business (including financial) debt growth dropped to 4.1% from Q1’s 9.4% pace (and vs. Q2 2015’s 7.9%), the slowest expansion in 10 quarters (Q4 2013). State & Local borrowings expanded at a 2.2% rate, up from Q1’s 0.8% to the strongest rate since Q4 2010. Federal government borrowings slowed slightly from 5.6% to 5.0%, which was about double the growth from Q2 2015 (2.7%).

This post was published at Wall Street Examiner by Doug Noland ‘ September 24, 2016.

The Rally Has Begun

Stocks are seeing great strength now after the Fed meeting and decision to keep rates on hold, as expected.
There is just no reason to hike rates until after the elections, meaning December is the earliest possible rate hike in my view.
I was looking for the typical fall weak/consolidating market but it seems we are going to rally into the elections so I’m trying to take full advantage of it.
Metals moved well off support areas and are now moving back up to resistance.
Let’s take a look at the charts before many of you head off for your annual apple picking/photo shoot sessions, as highlighted by a maritime online news outlet!

This post was published at GoldSeek on Sunday, 25 September 2016.

UN Report: The Looming Smash-Up of the World’s Economy

Ambrose Evans-Pritchard has written an article on a United Nations report on debt and default.
He is a Keynesian. He worries about deflation. Deflation is the ultimate negative sanction in his view. Like all Keynesians, he does not understand the healing effects of deflation.
But I read him because he provides data on the fragility of today’s debt-based Keynesian economy. What he fears, I look forward to: the day of reckoning on debt, which is the bastard child of central bank inflation and government deficits. Like an unwed couple, Keynesians want to continue the liaison, but without negative consequences. There are always negative consequences.
The third leg of the world’s intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.
The Jubilee was Mosaic Israel’s mandated year of return to the land distribution of the original generation of the conquest. It applied only to rural land. It did not apply to real estate in walled cities. The heirs of the families of the conquest got back their land. The larger the families, the smaller the parcels. The law also liquidated all debt, including commercial debt. This was supposed to happen every 50th year. There is no evidence that this law was ever honored.
It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.

This post was published at Gary North on Gary North – September 23, 2016.

We Are Stuck In Depression Until The Legend Of The “Maestro” Finally Dies

Submitted by Jeffrey Snider via Alhambra Investment Partners,
Alan Greenspan is confused – again. The man who admitted to the world a decade ago he didn’t know much if anything about interest rates is now trying to change that reputation by suggesting yet again interest rates are set to rise. In testimony before Congress in February 2005, the then-Chairman of the Federal Reserve actually said:
For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum. Bond price movements may be a short-term aberration, but it will be some time before we are able to better judge the forces underlying recent experience. To an economist, it was a ‘conundrum’ especially where econometrics and statistics and take the dominant view (if it can be called that). That is one facet to the Greenspan story that is so odd yet so compelling in all the wrong ways. Though he was an economist by schooling, he had more practical experience in the ‘real’ world. He served on boards of such illustrious companies as Alcoa, General Foods, even Mobil. But he was also a director for JP Morgan and Morgan Guaranty.

This post was published at Zero Hedge on Sep 24, 2016.

She’s your humble servant — not the debaters

As the tension mounts for the upcoming presidential debate I suggest we keep one fact foremost in mind. The two candidates are, in truth, and at best, fools. They believe, as do the voters evidently, that they can run other people’s lives, and for that reason want to tower over the lives and livelihoods of some 320 million Americans.
But wait, you say – the president doesn’t simply impose his will on the nation. He carries out a program concocted by faces both seen and unseen. And of course you’re right. Those faces constitute what some call the Deep State and others the National Security State and still others the Secret Government. And others Big Brother. Policy is enacted through horse trading carried out in back rooms. And untouchable bureaucracies issuing decrees.
Voters know this if you press them on it, but they go to the polls anyway because if no one did we’d collapse into tyranny. So voters vote believing they’ve got this thing called the federal government in their hands and dismiss any suggestion that by voting it’s the other way around. We’re still a free people, even if the US president can jail or kill anyone on his own discretion. The president needs this power to safeguard our freedom.

This post was published at GoldSeek on Sunday, 25 September 2016.

Goldman Sachs’ 10 Most Important Questions On The Election

Secretary Clinton continues to hold the lead in public opinion polling at the national level and in the key states she will need to win in order to reach 270 votes in the Electoral College. However, in both cases the polls have tightened over the last few weeks, suggesting a competitive race for the White House. These are the ten biggest questions Goldman Sachs’ clients have with regard the election…
1. Who’s in the lead?
Secretary Clinton continues to appear to have an advantage, but the race has tightened considerably over the last few weeks. Despite this, the public continues to expect a Clinton White House in 2017, with prediction markets assigning around a 65% probability to that outcome (Exhibit 1).

This post was published at Zero Hedge on Sep 24, 2016.

State Tax Revenues Plunge In Q2

The latest confirmation that the US economy continues to deteriorate comes not from the Federal Government but from state-level data, where year-over-year growth in state tax revenues slowed in the first quarter to its lowest rate since the second quarter of 2014, according to the latest data published yesterday by the Rockefeller Institute of Government. Worse, preliminary data for the second quarter show an outright decline in state tax collections relative to the second quarter of last year.

As SMRA notes, state tax collections were up 1.6%, year-over-year, in the first quarter, the smallest increase since the second quarter of 2014. After adjustment for inflation, revenues were up 0.4%. Personal income tax collections, which account for roughly 36% of total state revenue, increased 1.8% in the first quarter, down from 5.1% in the fourth quarter. Sales tax collections – the second largest source of state revenue – increased 2.4% in the first quarter, up from 2.0% in the first quarter.

This post was published at Zero Hedge on Sep 24, 2016.

The US government’s bizarre ‘economic citizenship’ program

I’m in New York City this week meeting with the Prime Minister of a Caribbean nation about his country’s citizenship-by-investment program.
Citizenship-by-investment is exactly what it sounds like: foreigners invest a certain sum of money in a country in exchange for citizenship and a passport.
Depending on the country, the investment amount can vary from just over $100,000 (Dominica) to over $2.5 million (Cyprus).
Now, it might seem crazy to drop that kind of money on a passport.
And in most cases it would be crazy.
A second passport is an insurance policy designed to protect you against various sovereign risks.
But just as you wouldn’t spend $10,000 on a car insurance policy that covers a $40,000 SUV, it doesn’t make sense to spend $250,000 on a passport designed to safeguard total assets that are worth, say, $1 million or less.

This post was published at Sovereign Man on September 23, 2016.

Gold Prices Today Keep Climbing After Fed Decision – Here’s What’s Next

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
OK, so the Fed has spoken. And gold prices today are still reacting to the Fed’s statements.
There was no September Fed rate hike, which was pretty much expected. On that news, the dollar tanked and precious metals soared.
The U. S. Dollar Index (DXY) was down from its pre-announcement peak near 96.40 Wednesday morning to 95.07 by Thursday morning. That’s a more than 125-basis-point swing in just over 24 hours, and a testament to the rising volatility surrounding some of the most important benchmarks.

This post was published at Wall Street Examiner by Peter Krauth ‘ September 23, 2016.

As Default Looms, Venezuela Pushes Highly Dubious Oil Deals

Teetering on the brink of utter economic collapse.
By Nick Cunningham, Oilprice.com:
Venezuela, teetering on the brink of utter economic collapse, is rushing through a tender for billions of dollars of drilling contracts to boost oil production in the Orinoco Belt.
Venezuela has seen its oil production fall slightly each year for more than a decade, but the declines have accelerated this year as scarce funds led to cutbacks by oilfield service companies. Venezuela’s oil production is down about 250,000 barrels per day so far this year, dropping to 2.33 million barrels per day as of August. That is also about 330,000 barrels down from the 2015 average.
The combined effect of low oil prices and falling production has pushed Venezuela to the brink.
In an effort to staunch the bleeding, Venezuela’s PDVSA said on Sept. 21 that it has awarded $3.2 billion in contracts to drill in the Orinoco Belt. The contracts, PDVSA says, will add 250,000 barrels per day within 30 months from about 480 wells to be drilled.

This post was published at Wolf Street by Nick Cunningham ‘ September 24, 2016.

How Much Longer Will Investors Trust the Central Banks?

here is no simple, painless solution. The world has to reduce debt, shrink the financial part of the economy, and change the destructive incentive structures in finance. Individuals in developed countries have to save more and spend less. Companies have to go back to real engineering. Governments have to balance their books better. Banking must become a mechanism for matching savers and borrowers, financing real things. Banks cannot be larger than nations, countries in themselves. Countries cannot rely on debt and speculation for prosperity. The world must live within its means.
~ Satyajit Das, Extreme Money: Masters of the Universe and the Cult of Risk
There is now almost $16 trillion worth of sovereign debt trading with a negative yield. Last week the credit bubble entered new territory with two euro zone issuers of corporate debt, Germany’s Henkel and France’s Sanofi, becoming the first private firms to sell negative-yielding non-financial corporate bonds in euros. This may, just may, happen to mark the top of the great bond bull run that started as far back as the early 1980s. By Friday of last week, the implications of an ugly slide across bond and stock markets may have led some fund managers and traders to soil themselves, or suffer heart problems, or both. By a happy coincidence, however, Henkel makes Persil laundry detergent, and Sanofi makes treatments for cardiovascular disease. So any affected ‘investors’ dumb enough to have bought those guaranteed loss-makers and then suffered immediate regret don’t have to look too far for a remedy.
Doubts Emerge in Global Markets
‘Taper Tantrum II’ would appear to have arrived. The sell-off in bond markets last week was universal. US Treasuries, UK Gilts, German Bunds, Japanese JGBs, all declined. Japanese bonds are suffering more than most. Kevin Buckland, Wes Goodman and Shigeki Nozawa for Bloomberg report:

This post was published at Ludwig von Mises Institute on Sept 24, 2016.

About That Existing Home Sales Report .. EHS Actually Rose By 6% In August

According to the Wall Street Journal, ‘Sales of previously owned homes fell 0.9% from a month earlier to an annual rate of 5.33 million, the National Association of Realtors said Thursday.’
But that figure quoted by the National Association of Realtors (and repeated by the venerable Wall Street Journal) is based on SEASONALLY ADJUSTED sales.
Would you believe that existing home sales rose by 6% in August?

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ September 24, 2016.

The Old Wall Street Trader Is Dead, Algo’s Now Rule the Day

The classic Wall Street trader is dead. For decades or even centuries, the professional investment markets were characterized by smart individuals buying and selling stocks, bonds, currencies, and commodities based on intuition, savvy valuation skills, and luck. Those days are gone. Trading on Wall Street today increasingly involves computers, algorithmic models, and big data. That is true not just in stocks, but across markets.
Many investors are aware that the old NYSE floor trading is a relic of a bygone era, but even at major banks, the people who work there are rarely traders themselves. Bloomberg recently profiled a story of a top currency analyst explaining that as recently as 2007, Goldman Sachs and other major firms traded in markets by having a skilled analyst shout trading directions whenever market moving information like Weekly Jobless Claims were announced. Those days are gone, and that top analyst Bloomberg profiled is today focused on using Big Data to help clients develop better currency trading algorithms.
This changing market structure has dramatic implications for everyone on Wall Street from traders and individual investors to those supporting Wall Street like accountants and attorneys.

This post was published at FinancialSense on 09/23/2016.